Skip to content

A Financial Checklist for Sending Your Child to College

Nick Murphy, CFP®

Sending your child to college brings a rollercoaster of emotions – excitement, sadness, and probably a little bit of stress and panic. Once you and your child make it past the application and decision process, you may be wondering what’s next. Yes, there’s class enrollment, academic expectations, packing, and moving, but there are also a lot of financial and administrative to-dos to ensure a smooth transition and overall college experience.  In an effort to save you some headaches, here is your financial checklist before your child heads off to college.

  1. Talk to an attorney – Most college students are 18 and considered adults under state law, therefore the rights of parents to make decisions in their behalf can be extremely limited. It’s a remarkable thing really. One day you can make any decision on their behalf, then the next day you can’t even get any information without their authorization.

While there are many resources to draft these documents online, we suggest you contact an attorney to have them consider drafting the following for your child:

    • Power of attorney document – This will grant you the legal authority to handle financial and legal matters on behalf of your child (if necessary). This can be helpful in case of emergencies, or if your child is temporarily unable to manage their affairs. It will even allow you to handle financial transactions, such as managing bank accounts, paying bills, filing taxes, and breaking a lease. You may also be surprised to realize his/her school will not release any grades to you without one.
    • Healthcare power of attorney – This legal document will name you, the parent, a “medical agent” for your college student if they become medically incapacitated. What happens if you don’t have this document in place? The doctors may make decisions about your child’s care without your knowledge.
  1. Come up with a plan for withdrawing 529 funds – If you opened a 529 account for your child, now is the time to figure out how and when to access those funds. Your financial advisor should be able to help, but here are some basic rules of thumb:
    • Money from your 529 plan account can be used for a range of qualified higher education expenses, such as tuition, room and board, books, and computer equipment. Be sure to review the full list of expenses covered by your state’s plan.
    • When possible, request that the 529 plan directly pay the college. This will help make things easier at tax time.
    • Qualified reimbursements must be in the same calendar year as the expense to avoid an unintended tax bill. For example, if you buy your child a laptop in August 2023 and plan to take a withdrawal to reimburse yourself, the withdrawal must also occur in 2023.
  1. Review insurance coverage – Check your existing insurance policies, such as health insurance and auto insurance, to ensure your child is adequately covered. Even if your child isn’t taking a car to college, it’s important to remember that auto insurance may provide protection when borrowing someone else’s car, riding as a passenger in another car, or riding a bike. If necessary, explore additional coverage options like renter’s insurance if they are living off-campus.
  2. Teach budgeting and financial responsibility – Provide guidance on budgeting, saving, living within their means, and avoiding unnecessary debt. If you’re planning to help pay for things like clothes, gas, etc., consider transferring a month’s worth of spending money at time. This reduces the risk of your child blowing through a semester’s worth of money in just a few weeks (it happens). Encourage them to track expenses and set financial goals to avoid running out of money before the month ends. If they do run out, think twice before you bail them out. It’s time for your little birdie to fly and figure it out on their own.
  3. Discuss credit cards and identity theft protection – Credit card companies LOVE college campuses. It’s one of their favorite marketing grounds. If your child is responsible, it may be a good idea for them to have their own credit card and begin to build credit.  However, before they fall prey to the credit card companies educate them about responsible usage, interest rates, and the importance of paying bills on time. Also emphasize the need to protect personal information to prevent identity theft or fraud.
  4. Discuss student loans and financial aid – For whatever reason, many college students don’t quite understand they have to pay the money back someday. These are probably the same people who have been bailed out by mommy and daddy for 18 years. If your child is taking out student loans or receiving financial aid, make sure they understand the terms, the repayment options, and the implications of borrowing money.
  5. Review financial aid packages annually – If your child receives financial aid, remind them to review their aid package each year. Help them understand the renewal process, deadlines, and any requirements for maintaining eligibility. Encourage them to explore scholarship opportunities and other sources of financial assistance.
  6. Explore tax implications – Familiarize yourself with any tax benefits or deductions related to education expenses. Understand the eligibility criteria for claiming these benefits and discuss them with your child, especially if they are responsible for filing their own taxes.

This is an exciting time, and there’s a lot to do when preparing for college. It is important to consult with experts in areas in which you are unsure. Consult with your financial advisor, attorney, insurance agent, banker, and others to seek personalized advice and guidance based on your unique circumstances.

For many (myself included), college can provide some of the best years of your life.  As we approach the fall season, we wish your family the best of luck on this exciting new journey.

Counterweight Private Wealth is a Registered Investment Advisor (RIA) with the Securities and Exchange Commission (SEC) with its principal offices in Raleigh, NC and Wilmington, NC. Registration of an investment adviser does not imply any specific level of skill or training and does not constitute an endorsement of the firm by the Commission. Counterweight Private Wealth only transacts business in states in which it is properly registered or is excluded or exempted from registration. A copy of Counterweight Private Wealth’s current written disclosure brochure filed with the SEC which discusses among other things, its business practices, services, and fees, is available through the SEC’s website at: www.adviserinfo.sec.gov.

Please note, the information provided in this document is for informational purposes only and investors should determine for themselves whether a particular service or product is suitable for their investment needs. Please refer to the disclosure and offering documents for further information concerning specific products or services. All investing involves risk, including the possible loss of principal. Statements of future expectations, estimate, projections, and other forward-looking statements are based on available information and author’s view as of the time of these statements. Accordingly, such statements are inherently speculative as they are based on assumptions that may involve known and unknown risks and uncertainties. Past performance of various investment strategies, sectors, vehicles and indices are not indicative of future results.

This material is not intended to be relied upon as a forecast, research, or investment advice, and is not a recommendation, offer, or solicitation to buy or sell any securities or to adopt any investment strategy. The information and opinions contained in this material are derived from proprietary and nonproprietary sources deemed to be reliable, are not necessarily all inclusive, and are not guaranteed as to its accuracy. This material is provided for educational purposes only and does not constitute investment, legal, tax, or accounting advice. Please consult with a qualified professional for this type of advice for your own unique situation.